The Sources of Capital Misallocation

NBER Working Paper No. 23129Issued in February 2017, Revised in February 2019

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A previous version of this paper was circulated under the title “Capital Misallocation: Frictions or Distortions?” We thank the editor and anonymous referees, Pete Klenow, Diego Restuccia, Francisco Buera, Daniel Xu, Richard Rogerson, Matthias Kehrig, Loukas Karabarbounis, Virgiliu Midrigan, Andy Atkeson, Hugo Hopenhayn and Russ Cooper for their helpful suggestions, Nicolas Petrosky-Nadeau and Oleg Itshkoki for insightful discussions, Junjie Xia for assistance with the Chinese data, and many seminar and conference participants for useful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.